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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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Mairs & Power – Power Fund 2023 Q1 Investor Letter | Buyside Digest

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Primary Source Intelligence • Q1 2023 Letter Analysis

Mairs & Power – Power Fund Quarterly Analysis

Buyside Digest is not affiliated with, and does not endorse, Mairs & Power – Power Fund. This analysis is provided for institutional research purposes only and is not investment advice.

Fund Returns

QTD+7.27%

YTD+7.27%

Annualized+11.2%

Positioning StanceConstructive

Market CapLarge Cap

GeographyUS

Digest Analysis

Quick Take

"Hurt by banking sector volatility but helped by strong AI-related technology performance. The fund added to JPMorgan during bank selloff and is positioned to benefit from artificial intelligence commercialization and eventual bank recovery as rates stabilize."

Executive Summary

The Mairs & Power Growth Fund returned 7.27% in Q1 2023, slightly underperforming the S&P 500's 7.50% return but outperforming its Morningstar Large Blend peer group. The quarter was dominated by the Silicon Valley Bank failure, which created nervousness across the banking sector and hurt the fund's bank holdings including US Bank, JPMorgan Chase, Wells Fargo, and Charles Schwab. However, the fund benefited significantly from artificial intelligence exposure through NVIDIA, Alphabet, and Microsoft, which gained from ChatGPT headlines and AI enthusiasm. Technology sector performance was a bright spot, with four of the top five performers being technology-related names. The managers added to JPMorgan during the volatility, viewing it as better positioned to gather deposits. Looking forward, the fund is well-positioned to benefit from AI commercialization and bank stock recovery as interest rates stabilize. The managers maintain their long-term focus and will continue taking advantage of short-term volatility when they see opportunity.

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Institutional Meta Strategy

Meta Strategy Gauges

Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.

Signal Matrix

Market Conviction

68%

CautiousHigh

Moderate (68%)

The fund demonstrates moderate-high conviction through concentrated holdings in named positions like NVIDIA (4.57%), Microsoft (9.30%), and specific additions to JPMorgan during volatility. Clear thesis on AI and banking recovery with specific position sizing mentioned.

Growth Outlook

25%

BearishBullish

Bearish (25%)

The managers express cautious optimism about markets, noting positive economic data and continued growth despite banking concerns. They acknowledge risks but see opportunities, particularly in AI and eventual bank recovery.

Risk Appetite

40%

DefensiveAggressive

Defensive (40%)

The fund actively added to positions during volatility, particularly JPMorgan and selectively US Bank and Hormel, indicating moderate risk appetite. They are positioned for AI commercialization and bank recovery.

Capital Deployment

25%

De-riskingDeploying

De-risking (25%)

The fund selectively added to JPMorgan, US Bank, and Hormel during the quarter's volatility. While no cash levels are provided, the described additions indicate modest net deployment activity.

Forward Guidance

30%

CautiousExpansionary

Cautious (30%)

Managers plan to continue taking advantage of short-term volatility when they see long-term opportunity. They express confidence in AI positioning and bank recovery but maintain selective approach.

Language Signal

20%

BearishBullish

Bearish (20%)

Language is balanced with both opportunity and risk mentions. Positive language around AI commercialization and bank positioning is offset by caution about banking sector stress and economic headwinds.

Perceived Risk

55%

Low RiskElevated

Moderate Risk (55%)

Managers acknowledge meaningful risks including banking sector stress, potential lending caution, and interest rate uncertainty. However, risks are discussed as manageable rather than systemic threats.

Opportunity Density

65%

ScarceAbundant

Abundant (65%)

Managers see selective opportunities, particularly in AI commercialization and quality banks during volatility. They describe taking advantage of short-term dislocations for long-term opportunity.

Time Horizon

75%

Short-TermLong-Term

Decade+ (75%)

The fund emphasizes long-term investing approach and willingness to hold through volatility. Managers focus on multi-year themes like AI commercialization rather than near-term catalysts, indicating patient capital approach.